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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The additional benefit received from the consumption of the next unit of a good or service






2. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






3. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly






4. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus






5. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






6. The most desirable alternative given up as the result of a decision






7. The difference between total revenue and total explicit and implicit costs






8. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






9. The total quantity - or total output of a good produced at each quantity of labor employed






10. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






11. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






12. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






13. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






14. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






15. AVC = TVC/Q






16. When firms focus their resources on production of goods for which they have comparative advantage






17. The price of a good measured in units of currency






18. Models where firms are competitive rivals seeking to gain at the expense of their rivals






19. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit






20. Exists if a producer can produce a good at lower opportunity cost than all other producers






21. All firms maximize profit by producing where MR = MC






22. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






23. ATC = TC/Q = AFC + AVC






24. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






25. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






26. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






27. A good for which higher income decreases demand






28. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






29. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






30. Two goods are consumer substitutes if they provide essentially the same utility to consumers






31. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






32. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






33. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






34. Exists at the point where the quantity supplied equals the quantity demanded






35. Ed < 1






36. MUx / Px = MUy/Py or MUx/MUy = Px/Py






37. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






38. Ed = 1






39. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






40. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






41. Product demand - productivity - prices of other resources - and complementary resources






42. Ed = 8 - infinite change in demand to price change






43. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






44. Es = (%dQs) / (%dPrice)






45. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit






46. The imbalance between limited productive resources and unlimited human wants






47. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






48. The rational decision maker chooses an action if MB = MC






49. The output where ATC is minimized and economic profit is zero






50. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good